Far too often, privatization pushers hold up the Indianapolis model of municipal services as an example of the benefits of competitive bidding. The Indianapolis model pits public workers against private contractors, forcing municipal employees to undercut themselves and the services they provide by regularly bidding on their own jobs.
The newly amalgamated city of Hamilton tried to introduce the model, sending each employee an invitation to bid on taking over municipal services. The offer has had few takers. Employee takeovers are also being proposed in Torontos alternative service delivery plans. Both cities should pay a follow-up call to Indianapolis, where the scheme has soured.
After a decade under the much-vaunted model, Indianapolis has decided to bring many services back in house, and no longer requires competitive bidding in many cases.
City workers no longer need to bid on work theyve won in the past, since they have demonstrated the superiority of in-house municipal services. In many areas, the union has clearly shown it is more efficient and ensures better quality to provide services publicly, rather than through private contractors.
Indianapolis municipal workers have not only retained their work, they have brought back work that had been handed to private contractors, expanding their share of garbage pickup and parks maintenance to 80 per cent and taking back 90 per cent of road work. Fleet services are now completely back in house. Clearly, the Indianapolis experience now favours municipal services.
According to the union representing the city workers, the key to success is reorganizing work to give front-line workers more authority and autonomy. Streamlining management, including eliminating middle-management positions, was another source of in-house savings. While theres still work to be done (the city recently bought back its water system but contracted out operations and maintenance), it looks like Indianapolis model is destined for the scrap heap.
Canadian cities and towns considering the Indianapolis model should look closely at the evidence. The lesson for municipalities is that competitive bidding is a painful and costly way of finding savings that are often short-lived or nonexistent. Canadian municipalities would be wise to redirect the attention and resources put into adversarial bidding towards tapping municipal employees expertise and ingenuity.